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LETTING GO AND MOVING ON BY JAMES OH

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MINDSET SHIFT: EMPLOYEE TO ENTREPRENEUR

BY JAMES OH

Tuesday, December 27, 2011

MANAGING CASH FLOW EFFECTIVELY

Dear friends,

How many of you have heard of the phrase "Cash is King"?
I believe many of have. Why is cash King? This is because cash is the lifeblood
of any company. It reflects the financial health of your business. The in and
out of your cash flow will be the determining factor on how you manage your
finances. If the inflow of money is not sufficient to cater for the needs of
the business, it may somehow affect the viability of the company. Hence, cash
flow is a key element of the success of any business. Without cash flow, the
profits are meaningless.

Some profitable business may even end up in bankruptcy or be wound
up, should the amount of money flowing out is not comparative to the amount of
money flowing in. Companies that has no good management of cash flow may not be
able to make the investments necessary to compete, or may be forced to pay more
in its loan activity.

Because of its crucial importance, I would like to share some tips
with you on how to manage the cash flow effectively:

1. Make a projection of cash flow over a periodic of time.

Always determine how much the inflow before determining the future cash to be
spent. Pay accordingly to the priority especially if there is a heavy penalty
fee imposed should you not settle on or before its due date. Interest and
overdue charges may be very expensive and this is an added expense for your
business.

2. Cash collection needed to be reviewed and improved constantly.

To encourage your clients to pay on time or earlier is a wise move.
Alternatively, you may request some down payments for ordered purchases, if
applicable. Review and monitor receivables regularly and identify those that
are about to become due.

3. Try not to pay debts earlier than due date even if there is
cash available for you to do so, always on due date.

Establishing a good pay master track record with your suppliers will help
you build goodwill for your company. This will assist you in obtaining
more flexible and better payment terms and conditions.

4. You may make good use of the surplus funds at any period of time to earn
some interest income by placing them into the money market. The quantum of
interest income generated is very much dependent on the period of the available
surplus fund and the interest regime at that particular time.

Therefore, it is very rewarding for anyone who is willing to work
hard and smart to accomplish strong cash flow. To do so, you are required to
analyze and manage your cash flow more effectively and fruitfully.

By now, you are able to see how cash flow will determine failure and success of
any business. Sometimes one will have to a pay heavy price for just stretching
the payment terms.

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Title of your contentcontains lots of inspiring and motivational stuff which intended to strengthen the readers' mind and soul as its name suggests.